Healthcare Business News

Judge blocks California from cutting Medicaid payments

By Gregg Blesch
Posted: January 31, 2012 - 5:45 pm ET

A federal judge in California issued a tentative ruling that blocks the state of California from cutting Medicaid payments by 10% for physicians, clinics, pharmacists, dentists, ambulance providers and durable medical equipment suppliers.

Trade associations representing the providers sued the California Department of Health Care Services and HHS arguing that the cuts violated federal law requiring that Medicaid programs ensure access to services, and that federal officials failed to appropriately consider the impact of the cuts in approving them.

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U.S. District Judge Christina Snyder wrote in the 25-page tentative ruling (PDF) that the groups that brought the lawsuit have a strong likelihood of succeeding in the argument that the CMS approval was “arbitrary and capricious.” California officials argued that providers don't have standing to sue to enforce federal requirements. Snyder ruled they do unless the U.S. Supreme Court rules otherwise in another California Medicaid case heard in October.

“The state's repeated attempt to slash Medi-Cal reimbursement rates is a short-sighted solution that balances the budget on the backs of the poorest and most vulnerable Californians,” Dr. James Hay, president of the California Medical Association, said in a news release.

In addition to the medical association, the plaintiffs in the case are the California Dental Association, the California Pharmacists Association, the National Association of Chain Drug Stores, the California Association of Medical Product Suppliers, AIDS Healthcare Foundation, American Medical Response West, Medi-Cal beneficiary Jennifer Arnold, and 25 unnamed Medi-Cal beneficiaries.

Earlier this month, Snyder issued a preliminary injunction blocking similar cuts to hospital-based skilled-nursing in a separate lawsuit brought by the California Hospital Association.

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